The levy is a percentage of bookmaker profits paid to British racing and was reformed in 2017 to include those who operated overseas.

Income is expected to be hit after new rules introduced last month mean the maximum stake that can be played on fixed-odds betting terminals (FOBTs) in betting shops has been cut from £100 to £2.

In 2017-18 the levy yield rose to almost £95m, but provisional returns suggest it will fall to £78m for 2018-19, despite a recent forecast of £87m.

"Bookmaker profits in the fourth quarter, particularly in February and March, were reported to be very substantially down on estimates," said Levy Board Chairman Paul Lee.

The news was revealed at a scheduled meeting between Andy Clifton from the Racecourse Association (RCA), Julian Richmond-Watson of The Horsemen's Group and Nick Rust from the British Horseracing Authority, who form racing's tripartite leadership.

A spokesman for the tripartite said: "We were shocked to see the big drop in levy yield for 2018-19, which was significantly below the previous forecast at the end of March.

"The bulk of the levy income is distributed as prize money. At a time when there is already significant debate in the industry around levels of prize money, we appreciate that any potential reduction will cause further concern."